Channel conflict is one of those internet buzzwords that unlike other cute transplants from the offline world has real and dire consequences for companies.

One company that's recently seen its share of channel conflict problems is Sony (SNE). A few months ago Sony angered its retailers by requiring them to sell Sony music label CDs that included hyperlinks to Columbiahouse.com - which Sony partially owns - and Sony's own Music store on the web (direct.sel.sony.com).

Were retailers angry? Of course. Retailers like Tower Records have been constantly under attack since the rise of music superstores, but now the threat of disintermediation became too much.

The result was an antitrust lawsuit against Sony by the National Association of Recording Merchandisers (NARM). The charge? The hyperlinks allowed Sony to get consumer's email and music preferences, and allowed consumers to bypass retailers without any compensation.

"I'm angry that after all the effort Tower puts into helping Sony artists, these links are being used to drive sales at Sony stores instead of at our stores," noted Stan Goman, Executive Vice President of Tower Records and Chairman of NARM's Board of Directors on the NARM web site.

Sony wasn't the only one doing this, since at the same time BMG was also beginning to explore selling direct to consumers and thereby bypassing their retailers.

SONY GOING AT IT AGAIN

Now Sony is doing it again. This time they're launching a new web site called SonyStyle.com. Included in the new site's offering will be many of the consumer electronic products that Sony traditionally sells through their expansive list of retailers.

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ABOUT THE AUTHOR
image of Allen Weiss

Allen Weiss is the founder of MarketingProfs as well as the founding teacher and director of Mindful USC, and a senior teacher at InsightLA.org where he has taught mindfulness classes for the past 12 years. He started meditating in the mindfulness tradition in 2005 and in 2011 his Basics of Mindfulness class at InsightLA was noted the Best in Los Angeles by LA Magazine.